Groupon, groupon, groupon

I’ve started a few times to write a blog post that replies line-by-line to John Battelle’s “thinking out loud” post about Groupon. I’ve decided to shelve that effort because, frankly, I agree with him that Groupon is a big deal for lots of reasons. More importantly, I discovered that such an approach required too much context regarding my journey of the past 20 years on the topic and marketplace of American small businesses and the internet, that my real reason for responding to John would be lost. (However, a fast draft of that response will likely make it into a future post unrelated to Groupon.)

More importantly, my response to John started sounding like an attack on Groupon or, worse, on Battelle. The truth is, I admire what Groupon has done and its potential; and I greatly enjoy Battelle’s writing, even when I disagree with him.

However, I believe one can admire Groupon’s success and believe in its potential, but still believe the company was mistaken not to sell to Google for $6 billion. One can admire Groupon, but still believe that any growth metrics they display today could falter for a whole list of possible factors.

And, most directly related to where I disagree with John, one can be a fan of Groupon and not compare what they’ve done to some lofty status as creator of “the third platform” of the past century for small businesses; something that Battelle says is as significant as the Yellow Pages and Google search ads.

One can believe Groupon can be a massive success, but let’s hold on. One is wading over into irrational exuberance when starting to call it “the third platform.” Without any research whatsoever (other than what is stuck in my brain from 20 years of writing about small business and, well, tracking the topic rather closely), I could argue that Ebay, with its $9 billion in net revenues, is a better “second platform” candidate than either Google or Groupon. While Google and Groupon depend on existing small businesses to utilize their services, Ebay has been a platform for the actual creation of tens of thousands of the the types of businesses that are represented in the statistics John uses when he cites the SBA’s approach to counting 23 million small businesses in America. (That number includes anyone claiming self-employed income when filing federal taxes.)

As John writes, Groupon’s rise to prominence may have been unprecedented, but that may also prove how easy it is to scale a 50% off coupon concept during the worst recession since the 1930s, not on how great Groupon is for the long-haul, when their 50% split with merchants comes under attack by competitors. John wants to attribute their success to some special genie in a bottle related to the amount of cash the company has, or its fun approach or the use of improv comedians as sales people, or whatever. That LivingSocial.com is growing at similar speeds and has just received $175 million from Amazon (who, I’ll remind John and others, has millions of affiliate sellers and marketplace participants, who also show up among the 23 million small businesses he cites) would seem to suggest that Groupon’s lock on the entire third-platform concept of aggregated buying (or voucher selling) is far from a done-deal.

Or maybe, just maybe, now that Groupon/LivingSocial has provided them a “first-order” view of the concept’s potential, small businesses may be attracted to an independent, self-forming platform that allows them to cut out the whole middle-layer of Groupon/LivingSocial — perhaps at a lower price that can be split between the merchant and consumer. Maybe a Craigslist or Wiki approach or, who knows, or a “whole-new-model” of an approach that allows small businesses to access shoppers and potential shoppers who wish to participate in self-forming purchasing groups — not through some intermediary like Groupon.

Somehow, I thought such disintermediation was part of the promise of both conversational marketing and Web 2.0.

Somehow, I must have misinterpreted what John was talking about all those years.

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Launched in August, 2000, RexBlog.com is the personal blog of Rex Hammock, founder/ceo of Hammock Inc., a customer media and marketing services company founded in 1991 in Nashville. Rex is also founder/helper-in-chief of SmallBusiness.com.(...)